Large numbers of illegal immigrants file tax returns using phony Social Security numbers to cash in on the federal Earned Income Tax Credit, thanks to lax government management, according to the author of a new study.
“Technically, only people authorized to work in the U.S. are eligible for the credit, you need a valid Social security number,” said Ed Rubenstein, a financial analyst and economist, speaking at a news conference Tuesday at the National Press Club.
“But identity theft, stolen Social Security numbers, and other scams effectively nullify the restriction. As a result, illegal aliens actually receive the EITC at even greater rates than legal immigrants,” Rubenstein said.
The IRS makes little or no effort to verify the authenticity of Social Security numbers, or existence of dependant children, Rubenstein said.
This makes it possible for illegal immigrants to claim children still living in Mexico as dependents and for parents living illegally in the U.S. to file separate returns claiming the same children as dependents under the EITC, Rubenstein said.
The EITC was created to boost work incentives for poor families with children. Childless households received a maximum $438 payment in 2008, while the maximum available to families with two or more children was $4,824.
“From a distance, the EITC looks like a winner,” he said. “The devil is in the details. For starters, the program is dominated by fraud.”
Illegal immigrant households are more than three times as likely to receive EITC than native-born American households,
Rubenstein said. Higher fertility rates evident among the immigrant population accounts for this disparity, he said.
“Even a tiny increase in the fertility rates, if maintained over the decades, will have enormous consequences,” Rubenstein said. “The role of EITC in the nation’s demographic destiny cannot be denied.”
Rubenstein also cited figures from the General Accounting Office (GAO) showing that as many as a third of all EITC claims are “improperly paid.”
Rubenstein’s report “The Earned Income Tax Credit and Illegal Immigration: A Study in Fraud, Abuse and Liberal Activism” is available at The SocialContract.Com.
